Church & Dwight Co., Inc.: Third Quarter EPS Rose 13.5% to $0.42 On 11% Sales Increase; Adjusted EPS Rose 8% for Quarter and 17% for Nine Months.Business Editors PRINCETON, N.J.--(BUSINESS WIRE)--Nov. 4, 2002 Church & Dwight Co., Inc. (NYSE NYSE See: New York Stock Exchange :CHD CHD coronary heart disease. ChD abbr. Latin Chirurgiae Doctor (Doctor of Surgery) CHD, n.pr See disease, coronary heart. CHD canine hip dysplasia. ) today reported third quarter net income of $17.6 million or $0.42 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, a 13.5% increase over the $15.2 million or $0.37 per diluted share in the same period last year. Last year's results included a $0.02 per share charge related to intangibles amortization that was discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: in 2002 with the adoption of accounting standard FAS 142. Adjusting for this unusual item, earnings per share increased by $0.03 per share or 8% from an adjusted $0.39 per share in the comparable period last year. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , combined with the Company's share of the income from affiliates, rose to $33.6 million, a $6.9 million or 26% increase as reported from a year earlier, and a $5.4 million or 19% increase as adjusted for the above-mentioned item. Robert A. Davies, III, Chairman and Chief Executive Officer of Church & Dwight, commented, "We are pleased at these solid third quarter results as compared to an unusually strong third quarter last year which, as we reported at the time, received a short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. benefit from our decision to cancel advertising spending immediately after the events of September 11. With the virtual completion of the two major integration projects following the acquisition of USA Detergents and the consumer products business of Carter-Wallace, we are beginning to see the improvement in gross margin we had expected, which enables us to increase our investment in marketing and new product development." Total Church & Dwight sales for the third quarter, excluding Armkel and other affiliates, increased 10.7% to $263.8 million from $238.4 million last year. This increase is primarily due to the Arrid(R) antiperspirant antiperspirant /an·ti·per·spir·ant/ (-per´spir-ant) inhibiting or preventing perspiration, or an agent that does this. an·ti·per·spi·rant n. and Lambert Lambert may refer to
KAY Kansas Association of Youth (R) pet care product lines acquired from Carter-Wallace late in 2001. Consumer products sales increased 11.2% to $217.6 million, and specialty products sales rose 7.9% to $46.2 million. Excluding acquisitions and disposals, and adjusting for prior year promotion reserves as described below, sales of existing products increased 3%, with higher laundry Laundry can be:
Before industrialization , deodorizer deodorizer or deodorant, substance used to absorb or eliminate offensive odors. Disinfectants such as hydrogen peroxide, chlorine, and chlorine compounds eliminate odors caused by microorganisms. and specialty products sales, and slightly lower personal care sales. At the retail level, the Company estimates that consumer purchases of Church & Dwight products increased 3% over the same period last year, and purchases of Armkel products increased 9%, which represents an average 4.5% increase in consumer takeaway for the combined business. The growth in laundry products was led by higher sales of Arm & Hammer(R) liquid laundry detergent detergent (dētûr`jənt, dĭ–), substance that aids in the removal of dirt. Detergents act mainly on the oily films that trap dirt particles. and Fresh'N(R) Soft fabric softener Fabric softener (also called Fabric Conditioner) is used to prevent static cling and make fabric softer. Popular brand names include Lenor, Lenor/Downy, Snuggle, and Comfort. , both of which significantly outpaced their categories. Deodorizer sales benefited from increased marketing support for both Arm & Hammer Super Scoop(R) cat litter Cat litter (often called kitty litter) is one of any of a number of materials used in litter boxes to absorb moisture from cat feces and urine, which reduces foul odors such as ammonia and renders them more tolerable within the home. and Fridge-n-Freezer(R) deodorizer. Within personal care, both Arm & Hammer Dental Care(R) toothpaste toothpaste, n See dentifrice. and the recently relaunched Ultramax(R) deodorant deodorant /de·odor·ant/ (de-o´der-int) 1. masking offensive odors. 2. an agent that so acts. de·o·dor·ant n. antiperspirant line achieved strong unit growth over last year; however, due to a pricing realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. for the Ultramax line and declining sales of mints Mints are facilities that mint coins or print banknotes. Argentina
Third quarter gross margin was 30.8% as reported, and 30.1% as adjusted for the change in promotion reserves described below, an improvement of about 1.5% from the first half year of this year. During the quarter, the Company sold most of the remaining high-cost antiperspirant inventories produced at the former Carter-Wallace Cranbury, NJ, plant, which should help improve gross margin going forward. Marketing spending was significantly higher overall, and advertising rose more than 30% compared to both the first half of this year and the third quarter of last year. The $4.3 million increase in selling, general and administrative expenses included a significant rise in R&D spending on new product development. During the quarter, the Company adjusted its estimated liability for prior year promotion programs and reduced reserves by $2.5 million. This adjustment had the effect of increasing both the reported sales and gross profit for the period. On the negative side, the Company took a $1.1 million impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge related to the trademark valuation of a recently acquired brand, which the Company now expects to reposition in the market. This charge is included in selling, general and administrative expenses. The Company also incurred a $1.3 million foreign exchange loss in Brazil due to the effect of a 27% currency devaluation Currency devaluation A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold. on local debt, about half of which related to the recent buyout Buyout The purchase of a company or a controlling interest of a corporation's shares. Notes: A leveraged buyout is accomplished with borrowed money or by issuing more stock. of the minority interest in the Brazilian subsidiary. The devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. had no effect on the operating performance of that company which reported higher dollar sales and operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for the quarter. For the nine months, net income increased 23% to $51.1 million or $1.23 per share from $40.9 million or $1.00 per share in the same period last year. This year's results included a $0.01 per share net charge related to the step-up of inventory values by our affiliate Armkel and the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of profits under the Armkel joint venture agreement. Last year's results included a $0.02 per share plant shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down charge as well as a $0.04 intangibles amortization charge that was discontinued in 2002. Adjusting for these unusual items, earnings per share increased $0.18 or 17% to $1.24 from $1.06 per share last year. Operating income, combined with the Company's share of the income from affiliates, increased $25.0 million or 35% to $97.4 million as reported from a year earlier, and $21.3 million or 28% to $98.0 million as adjusted for the above-mentioned items. Nine months sales, excluding unconsolidated affiliates, increased 12.1% to $779.1 million. In addition to its 50% interest in Armkel, the Company has two unconsolidated 50%-owned affiliates in the specialty products business, Armand products and Armakleen. Church & Dwight sales, combined with its three unconsolidated affiliates, increased 55% to $1,130.4 million, primarily due to the acquisition of the Carter-Wallace consumer products business in September 2001. During the quarter, the Company prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. $20 million of its term
debt. At quarter-end, the Company had outstanding long-term debt Long-Term DebtLoans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of $380 million, and cash less short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. of $55 million, for a net debt position of $325 million, a reduction of $55 million from the same quarter-end last year. Cash flow (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ), as defined in the Company's bank loan agreements, is estimated to be over $102 million for the nine months. ARMKEL, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control Armkel, LLC, the 50/50 joint venture between Church & Dwight and the private equity group, Kelso & Company, reported net income of $9.3 million. Sales were $110.3 million, a 5% increase from last year, about half of which relates to foreign currency gains in the international business. Last year's U.S. sales benefited from the timing of promotional activity by the predecessor Carter-Wallace Company in its final quarter. While this year's U.S. sales are about the same as last year's, Armkel's three major brands - Trojan(R) condoms, Nair(R) depilatories and First Response(R) pregnancy kits, all reported strong growth in retail consumption for the quarter. For nine months, net income was $25.2 million on net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $322.6 million. Excluding a first quarter one-time pre-tax accounting charge of $8.1 million related to the step-up of opening inventories, net income would have been $33.3 million. During the quarter, Armkel completed the shutdown and decommissioning Decommissioning is a general term for a formal process to remove something from operational status. Some specific instances include:
Armkel had outstanding long-term debt of $434 million, and cash less short-term debt of $33 million, for a net debt position of $401 million at quarter-end. This compares with a net debt position of $395 million on September 28 last year when Armkel started operation with the acquisition of the former Carter-Wallace consumer products business. Since that date, Armkel has paid over $50 million in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , integration and other one-time costs. Armkel estimates its remaining liability for deferred severance, facility carrying and related costs at approximately $15 million. Based on the definition in its bank loan agreements, which includes the add-back of certain one-time costs, Armkel's cash flow (EBITDA) is estimated at over $80 million for the nine months. Mr. Davies added that, during the last twelve months, Church & Dwight has closed or disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of certain non-core operations acquired in 2001 from USA Detergents and Carter-Wallace, and changed the distribution arrangements for certain international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . As a result, the Company expects that Church & Dwight's fourth quarter sales will be slightly below those for the same period last year, while the combined sales of Church & Dwight and Armkel should be slightly higher. The Company expects that improved margins, combined with significantly higher marketing and new product spending, should result in fourth quarter earnings in the range of $0.34-0.36 per share compared to a reported $0.15 per share and an adjusted $0.32 per share for the same period last year. Mr. Davies also said, "For the full year 2002, our objective remains to achieve adjusted earnings per share in the range of $1.58 to $1.60, approximately 15% above the adjusted $1.38 per share last year." Mr. Davies concluded by reaffirming the Company's long-term objective, laid out in the second quarter earnings release, to achieve average earnings growth of 12 1/2-15% a year going forward. Church & Dwight will host a conference call to discuss third quarter 2002 earnings with the investment community on November 4 at 10:00 a.m. (ET). To participate, dial in at 877-851-4789. A replay will be available two hours after the call through November 11, 2002. The replay number is 800-642-1687, access code 15341. Also, you can participate via webcast by visiting the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's web site at www.churchdwight.com. The replay will be archived on this site. Church & Dwight Co., Inc. is the manufacturer of household, personal care and specialty products, sold under the ARM & HAMMER brand name and other well-known trademarks. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. relating, among others, to short- and long-term financial objectives, sales growth, cash flow and cost improvement programs. These statements, including the statements above as to the impact of the USAD USAD United States Academic Decathlon USAD United States Army Depot USAD USIGS System Architecture Description and Carter-Wallace acquisitions on sales and earnings, represent the intentions, plans, expectations and beliefs of Church & Dwight, and are subject to risks, uncertainties and other factors, many of which are outside the Company's control. These factors, which include the ability of Church & Dwight to successfully exercise its option to acquire the remaining 50% interest in Armkel, and assumptions as to market growth and consumer demand (including the effect of recent political and economic events on consumer purchases), and the outcome of contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. , including litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , environmental remediation Generally, remediation means providing a remedy, so environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment or from a and the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of assets, could cause actual results to differ materially from such forward-looking statements. With regard to new product introductions, there is particular uncertainty related to trade, competitive and consumer reactions. For a description of additional cautionary statements, see Church & Dwight's and Armkel's quarterly and annual reports filed with the SEC, as well as Carter-Wallace's historical SEC reports.
Church & Dwight Co., Inc. and Subsidiaries
Product Line Net Sales
Dollars in Thousands
--------------------
SALES
(EXCLUDING AFFILIATES) Three Months Ended Nine Months Ended
---------
Sept.27, Sept.28, Sept.27, Sept.28,
2002 2001 2002 2001
-------------------- ----------------------
Deodorizing and Cleaning $ 62,349 $ 59,640 $ 188,123 $ 165,277
Laundry $ 101,142 $ 98,308 $ 299,046 $ 288,743
Personal Care $ 46,384 $ 26,243 $ 131,551 $ 80,545
International $ 7,719 $ 11,378 $ 23,681 $ 30,229
-------------------- ----------------------
Total Consumer Products $ 217,594 $ 195,569 $ 642,401 $ 564,794
Specialty Products
Division $ 46,192 $ 42,803 $ 136,650 $ 129,994
-------------------- ----------------------
Total Reported Net Sales $ 263,786 $ 238,372 $ 779,051 $ 694,788
==================== ======================
SALES
(INCLUDING AFFILIATES)(1) Three Months Ended Nine Months Ended
---------
Sept.27, Sept.28, Sept.27, Sept.28,
2002 2001 2002 2001
-------------------- ----------------------
Deodorizing and Cleaning $ 62,349 $ 59,640 $ 188,123 $ 165,277
Laundry $ 101,142 $ 98,308 $ 299,046 $ 288,743
Personal Care $ 101,806 $ 26,243 $ 293,879 $ 80,545
International $ 61,455 $ 11,378 $ 182,823 $ 30,229
-------------------- ----------------------
Total Consumer Products $ 326,752 $ 195,569 $ 963,871 $ 564,794
Specialty Products
Division $ 56,523 $ 54,105 $ 166,572 $ 166,413
--------------------------------------------
Total Net Sales (Incl.
Affiliates) $ 383,275 $ 249,674 $1,130,443 $ 731,207
Less: Unconsolidated
Affiliates $ 119,489 $ 11,302 $ 351,392 $ 36,419
--------------------------------------------
Total Reported Net Sales $ 263,786 $ 238,372 $ 779,051 $ 694,788
============================================
(1) These sales include the three 50/50 affiliates: Armkel, Armand and
Armakleen.
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
Three Months Ended Nine Months Ended
---------------------------------------------------------------------
(In thousands, except
per share data) Sept.27, Sept.28, Sept.27, Sept.28,
2002 2001 2002 2001
---------------------------------------------------------------------
Net Sales $ 263,786 $ 238,372 $ 779,051 $ 694,788
Cost of sales 182,586 166,524 548,663 489,049
---------------------------------------------------------------------
Gross profit 81,200 71,848 230,388 205,739
Marketing expenses 22,752 19,995 61,737 55,240
Selling, general and
administrative expenses 30,299 26,018 88,982 81,207
---------------------------------------------------------------------
Income from Operations 28,149 25,835 79,669 69,292
Equity in earnings of
affiliates 5,453 886 17,734 3,069
Other income (expense),
net (6,762) (3,028) (19,029) (5,370)
---------------------------------------------------------------------
Income before minority
interest and taxes 26,840 23,693 78,374 66,991
Minority Interest -- 29 129 3,783
---------------------------------------------------------------------
Income before taxes 26,840 23,664 78,245 63,208
Income taxes 9,265 8,418 27,095 22,337
---------------------------------------------------------------------
Net Income $ 17,575 $ 15,246 $ 51,150 $ 40,871
---------------------------------------------------------------------
Net Income per share -
Basic $ 0.44 $ 0.39 $ 1.29 $ 1.05
Net Income per share -
Diluted $ 0.42 $ 0.37 $ 1.23 $ 1.00
---------------------------------------------------------------------
Dividend per share $ 0.075 $ 0.075 $ 0.225 $ 0.215
---------------------------------------------------------------------
Weighted average shares
outstanding - Basic 39,794 39,011 39,548 38,803
Weighted average shares
outstanding - Diluted 41,875 41,037 41,749 40,724
---------------------------------------------------------------------
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands) Sept. 27, Sept. 28,
2002 2001
---------------------------------------------------------------------
Assets
---------------------------------------------------------------------
Current Assets
Cash, equivalents and
securities $ 76,148 $ 37,747
Accounts receivable 102,600 106,934
Inventories 89,133 106,743
Other current assets 32,562 28,864
---------------------------------------------------------------------
Total Current Assets 300,443 280,288
---------------------------------------------------------------------
Property, Plant and
Equipment (Net) 240,975 239,375
Equity Investment in
Affiliates 129,408 128,832
Intangibles and other
assets 315,382 282,909
---------------------------------------------------------------------
Total Assets $ 986,208 $ 931,404
---------------------------------------------------------------------
Liabilities and
Stockholders' Equity
---------------------------------------------------------------------
Short-Term Debt $ 20,772 $ 2,535
Other Curent Liabilities 164,863 186,500
---------------------------------------------------------------------
Total Current
Liabilities 185,635 189,035
---------------------------------------------------------------------
Long-Term Debt 379,969 415,133
Other Long-Term
Liabilities 87,940 49,933
Stockholders' Equity 332,664 277,303
---------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $ 986,208 $ 931,404
---------------------------------------------------------------------
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